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Jury Waiver And Arbitration Agreements Require Specificity

A recent New Jersey Appellate Division decision once again highlights the specificity required to enforce jury waivers or agreements to arbitrate employment disputes.  In Noren v. Heartland Payment Systems, Inc., ___ N.J. Super. (App. Div. 2017), Plaintiff signed an employment agreement containing a jury-waiver provision stating that the parties “irrevocably waive any right to trial by jury in any suit, action or proceeding under, in connection with or to enforce this Agreement.”  Plaintiff was subsequently terminated and filed suit against the Defendant employer for breach of contract and violation of New Jersey’s whistleblower law, the Conscientious Employee Protection Act (“CEPA”).  Plaintiff’s request for a jury trial was denied and the trial judge dismissed his claims and entered an award for Defendant of over $2 million in fees and costs.

On appeal, Plaintiff challenged the jury waiver provision.  The Appellate Division’s decision provides an excellent summary of the analysis applied to determine whether jury waiver or arbitration provisions will be enforced.  The right to a jury trial is not only a Constitutional guarantee, but in the case of Plaintiff’s CEPA claim, is specifically provided by statute.  The waiver of these rights “must be clearly and unmistakably established.”  While no magic language is required to establish a waiver, the language must at a minimum “clearly explain (1) what right is being surrendered and (2) the nature of the claims covered by this waiver.”  The Court referenced prior court decisions to illustrate this point.

In one case, an arbitration provision contained in an employment agreement stated only that “any controversy or claim” arising from the agreement was subject to arbitration.  Because no reference was made to statutory claims such as CEPA or discrimination claims covered by New Jersey’s Law Against Discrimination, the provision at issue was deemed unenforceable.  As the Court held “a waiver-of-rights provision should at least provide that the employee agrees to arbitrate all statutory claims arising out of the employment relationship or its termination.”

By contrast, an arbitration provision addressed by another court specifically identified claims based on statutes, ordinances and anti-discrimination statutes.  The relevant clause addressed in a third decision actually listed by name the anti-discrimination statutes being waived.  In both decisions, the Court concluded that the language at issue established a clear intent to waive statutory remedies.

Based upon these principles, the Noren Court found that the waiver provision was not sufficient to establish a waiver of the right to a jury trial on Plaintiff’s CEPA claim.  The waiver language applied to “any suit, action or proceeding under, in connection with or to enforce this Agreement.”  This provision made no reference to CEPA or other statutory claims and it did not define the scope of claims being waived as including all claims relating to Plaintiff’s employment.  By limiting the waiver to claims under “this Agreement,” the language failed to clearly explain that statutory claims like CEPA were also being waived.   The case was therefore reversed and remanded for a jury trial on Plaintiff’s CEPA claims. (Note, however, that the dismissal of Plaintiff’s breach of contract claim was upheld, as was the $2 million award of fees and costs).

If your organization utilizes waiver provisions or arbitration agreements, now is a good time to review them, keeping in mind the principles set forth above.

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